Introduction | Part 1 - Hybrid Working | Part 3 - ESG | Conclusion

There has been a wide range of experiences financially for businesses throughout the pandemic. Some had to make redundancies as they saw aspects of their business shut down, whilst others, like the pet industry, benefitted from people staying home.

The fallout from the pandemic is still affecting some industries, including transport, which may not recover to pre-pandemic levels due to hybrid working. Looking to the future, most businesses are experiencing that, as opposed to redundancies, they are facing a recruitment and retention crisis that is being felt across multiple sectors. How can businesses effectively tackle this at a time when their own costs are increasing due to global circumstances?

The simple fact is that many businesses are having to pay to get talent in. However, not all businesses can afford to pay high salaries and are concerned about losing valued staff if they pay new employees more. Current staff observe the salaries that new starts are receiving, or competitors are paying, and are demanding more money. In addition, individuals are now facing a cost of living crisis which may again change priorities.

Salary expectations are high across all industries, creating some real difficulties. Some businesses are taking a two-staged approach to salary reviews, looking at the workforce as a whole and separately negotiating with key individuals.

Another challenge is employees’ expectation that it is an employer’s responsibility to respond to inflation. Even in businesses that are losing money, staff are still looking for salary increases as the cost of living bites.

PRESSURE POINT:

Whilst a recession is anticipated, it is projected that any recession will be short lived. As many businesses are understaffed, we envisage that rather than redundancies, businesses may have to consider restructuring or a change to terms and conditions to remain viable. In certain industries, this could also lead to more industrial unrest.

Some industries reported a real skills shortage, particularly in lower-skilled sectors that have also been hit by Brexit and the end of free movement. However, participants also highlighted difficulties in attracting talent from candidates outside the UK, even in different industries and where the work can be done remotely.

Discussions revealed that staff shortages are compounded by the fact that current employees are often less willing to do overtime, particularly unpaid, perhaps as a result of the pandemic and a re-evaluation of work-life balance.

Organisations are being forced to come up with broader benefit packages to be attractive to both current and potential workers. Some businesses are doing what they can to assist staff with cost of living increases, focusing their efforts on what will make a real difference to their staff in the current economic environment, and using their size and the resources that they have to offer staff benefits where they can.

For example, a food business offering staff the opportunity to buy food packages at lower prices. A four-day working week has been considered by some employers as a potential solution to the current cost of living crisis, particularly where organisations cannot afford to provide salary increases but understand that a four-day working week is viewed as a very attractive benefit. Other organisations are holding listening groups to understand what staff want and expect so they can respond to real need.

The growth of hybrid working is a theme in retention and recruitment too, proving both beneficial and detrimental to different businesses. Companies that are headquartered in more remote or less “desirable” locations are finding they can attract a wider pool of candidates, because they can offer good roles without the need for the candidate to move to the HQ location. However, some businesses are finding that they are losing out on talent to companies based in larger cities, such as London, where higher salaries are available without the need to move to a more expensive location.

In addition, participants reported that in recent recruitment rounds, without exception, candidates wanted to know how much they would be expected in the office. Hybrid working and flexibility are viewed as key benefits. Some businesses are finding that when recruiting, candidates are not requesting remote working until the end of the recruitment process. Perhaps because candidates know that they are more likely to get flexible working approved at this stage when businesses have already dedicated cost, time and resource to their selection.

PRESSURE POINT:

A recent report by Microsoft showed that Generation Z workers (those born after 1997) are nearly twice as likely to switch jobs than other workers and that by 2030, Generation Z workers will make up about 30% of the workforce. This has led to Microsoft developing software products aimed at younger workers, including software that provides workers with a sense of belonging and social connection when working remotely. Employers will need to find novel ways to entice, engage and retain younger workers in a hybrid world to avoid high staff turnover.

In an era where candidates can afford to be picky about where they work, culture (including good ESG and diversity and inclusion credentials) was viewed as important to all businesses seeking to recruit.

Certain industries are suffering more, for example, the oil and gas industry has become less attractive to some workers following COP26. It is not solely about the money. Workers are looking for both emotional and moral connections too. One organisation had lost a female candidate because the business had a low proportion of female workers. As one participant noted, you can throw as much money at someone as you want, but if they do not feel welcome, they won’t want to work for you. It was acknowledged that it is difficult to find and entice a diverse spread of candidates when labour is in such short supply. Businesses need to be able to demonstrate good ESG credentials to retain and attract talent.

SO WHAT?

At a time when vacancies still outstrip supply, how can my business be an employer of choice?

Despite the cost of living increasing, being an attractive employer is not solely about money. Certain benefits are very important to employees now too, in particular hybrid working and flexibility.

Indeed, a recent study showed that flexible working hours ranked as the most important employee benefit when considering a work move in 2022[1]. Early finishes on a Friday and a four-day working week were also attractive to candidates. Accordingly, businesses should review their benefits to ensure that their offerings are attractive to the talent that they seek. Navigating the delicate balance of business needs versus employee expectations is tricky, and effective engagement and communication with both candidates and staff will be crucial to get that balance right.

Businesses should focus on having both short- and long-term plans to ensure they become an employer of choice. Helpful short-term wins in the current economic climate can include encouraging the use of, or introducing salary sacrifice for benefits where possible, sign-posting financial and wellbeing help, and implementing a supportive, open culture.

Providing flexibility and autonomy in the way an employee works costs little but is viewed as a key benefit for workers. Long-term plans that can help to become an employer of choice should include having targeted and measurable ESG goals, particularly relating to sustainability and diversity. Businesses should also consider relatively untapped talent pools, for example, neurodiverse individuals.

[1] https://remote.com/future-employee-benefits

Economic Outlook, Recruitment & Retention

There has been a wide range of experiences financially for businesses throughout the pandemic. Some had to make redundancies as they saw aspects of their business shut down, whilst others, like the pet industry, benefitted from people staying home.

PRESSURE POINT:

In an era where candidates can afford to be picky about where they work, culture (including good ESG and diversity and inclusion credentials) was viewed as important to all businesses seeking to recruit.

At a time when vacancies still outstrip supply, how can my business be an employer of choice?

Despite the cost of living increasing, being an attractive employer is not solely about money. Certain benefits are very important to employees now too, in particular hybrid working and flexibility.

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